For many people with federal student loan debt, it has been approximately three years since they were obligated to make a payment on their loans. The pause on these payments started at the beginning of the COVID-19 pandemic and has continued since then, eight separate times.
Another extension has been issued for this pause on payments after legal challenges were made regarding President Biden’s widespread student loan forgiveness program originally announced in August. To help borrowers who were anticipating help from this forgiveness, the government announced student loan debt bills from the federal government will not be collected formally for months.
In August 2022, President Biden announced that he would be canceling up to $20,000 of federal student loan debt, which would affect nearly tens of millions of Americans. However, soon after the announcement was made, Republicans quickly filed lawsuits against his plan, which forced the administration to close the application portal in November 2022.
Any movement in the student loan forgiveness program has been blocked as these cases make their way to the U.S. Supreme Court. In fact, the Supreme Court is scheduled to hear oral arguments over Biden’s student loan forgiveness plan beginning at the end of February 2023.
The Department of Education has stated that payments on federal student loan debt will depend on when the justices reach a decision on this case. According to the Department, if a decision is issued relatively quickly after the February 28th hearing, repayment on loans could restart in May or June 2023. If the justices wait until the end of their term to issue a decision in June or July, then loan payments would likely not restart until August or September.
Federal student loan bills will likely then be due 60 days after the Supreme Court case is finalized. The Department insists they are fully prepared to defend their program to forgive student loan debt.
The litigation and uncertainty regarding when federal student loan payments will restart has many borrowers unsure of what to do, as well as what they owe. Another concern is the fact that as the country is three years after the pandemic started and federal student loan payments were paused, millions of Americans are now accustomed to not having to pay their student loan bills. Restarting them will certainly create an unwelcome change to their lives.
The Department has expressed concern about whether they will experience higher loan default rates once payments resume, thus adding to the uncertainty surrounding student loan debt.
During this extended payment pause period of time, the Department has also been prevented from resuming collection activity on federal student loan debt. The Education Department has stated they will not resume collection activity during this extended payment pause.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.